Member container shipping lines in the Westbound Transpacific Stabilization Agreement (WTSA) will add a new component to their bunker fuel charges, to offset the added cost of burning more costly low-sulfur fuel while sailing within 200 miles of North American coastal waters.

The low-sulfur component (LSC) will be incorporated into WTSA’s guideline bunker charge, effective with the calendar quarter beginning October 1, 2012, in the amount of $11 per 40’ container (FEU) from the West Coast, and $38 per FEU from the East and Gulf Coast. It will be based on the same 13 week reporting period as the standard bunker charge and will be adjusted on the same effective dates.

The LSC is based on:

Average weekly price differentials between standard bunker and low-sulfur fuel as reported by Platt’s;

A weighted average of WTSA carriers’ relative daily consumption of the different fuels; and

Average per-sailing days within the 200 mile ECA limit.

The component is applied by backing out from the current bunker charge the number of sailing days within the ECA per voyage, at the fuel consumption rates and prices for standard bunker fuel, and then adding back in the number of days in the zone and costs based on average low-sulfur consumption and prices. All other calculation variables used in the existing bunker charge formula remain the same.

The United Nations’ International Maritime Organization (IMO) established its new North American Emissions Control Area (ECA) effective August 1, 2012, under the MARPOL Annex VI protocol, to which the U.S. and Canada are signatories. The result has been higher costs during the sailing days WTSA line vessels operate inside the expanded zone – a weighted average 4.3 days from the U.S. West Coast, and 4.75 days from the U.S. East and Gulf Coasts.

According to price data reporting service Platt’s, price differentials between standard bunker and premium low-sulfur fuel at the four key loading locations used to calculate the WTSA component – Los Angeles/Oakland, Seattle, Charleston and New York – ranged from $87 to $260 per metric ton as of mid-August.

Price differentials tracked by WTSA have risen in recent months, particularly on the West Coast as the ECA has been implemented in August. An internal price sensitivity study reveals that for every $20 per metric ton change in low-sulfur fuel prices, component levels rise or fall $5 to the West Coast, and $7 to the East and Gulf Coasts.